Wage theft is not new. Sadly, companies and other employers across the country have been shortchanging their workers for a long time before the rise of the 40-hour workweek.
This form of theft—taking money that employees legitimately earned out of their pockets—occurs in a number of ways. Misclassification is one of the most prominent. It is also under attack.
Broad groups of working people are stiffed on minimum wages, overtime pay, and other protections on the job because they are classified as independent contractors, rather than employees. A growing wave of these workers is fighting back, led by those in delivery and gig jobs.
At Justice Law Corporation, our California wage and hour attorneys help people ensure that they are fully paid for their work. We are seasoned lawyers who have dedicated our careers to fighting for working people in California and Washington. Our lawyers have a strong track record of success for the people that we represent.
Delivery and gig workers are taking on big corporations over wage theft, but they are not alone. A wide range of workers in other industries and jobs are being underpaid because they are wrongly classified as contractors.
Here is what you need to know.
Employee or Independent Contactor: Why it Matters
A person who is classified as an independent contractor rather than an employee is generally treated as a self-employed entrepreneur. That means you are on your own when it comes to pay, benefits, and protections.
Contractors are not covered by the following legal protections for employees:
- Minimum wages
- Overtime pay
- Anti-discrimination and retaliation laws
- Workers’ compensation
- Workplace safety rules
- Union rights
- Unemployment insurance
This may make sense for contractors who are truly operating their own small businesses, even if they are the only employees. For example, a graphic designer who routinely works on projects for multiple companies and controls when and how he or she works is probably not an “employee” of any of those clients.
There are some benefits to being classified as a contractor. You can write off certain business expenses for tax purposes, for instance. That includes home office expenses and gas, and meals for work-related travel.
But companies frequently use the contractor designation on workers who have all the hallmarks of employees. Consider this: Contractors have to pick up the tab for both the employer and the employer’s share of payroll taxes. And companies do not have to chip into unemployment and other insurance programs to cover workers who are classified as contractors.
Delivery Drivers and Gig Workers Challenge Misclassification
A slew of lawsuits over the status of delivery and gig workers highlight how misclassification waters down workers’ rights. These cases, raging across states, raise significant legal questions about who is an employee and who is a contractor.
At the center of the firestorm are some of the largest app-based service providers, like rideshare giants Uber and Lyft, and food delivery platforms DoorDash and Grubhub. “Last-mile” delivery service providers, which work for online retailers like Amazon, are also deeply involved in the debate.
These kinds of jobs have exploded over the last decade, thanks to the rise of the “sharing economy” and the massive shift to online shopping. The positions often blur the lines of traditional employment. Meanwhile, companies are squeezing the people performing the jobs by diverting tips, using algorithms to reduce paid hours, and generally shifting financial burdens that employers typically shouldered onto workers.
Employees have a wide range of federal legal protections, as well as even stronger protections under state laws in states like California and Washington. These laws broadly guarantee workers the right to be paid at least the minimum wage for all time spent on the job—including between rides or deliveries—and to overtime pay for extra hours. They also limit employers’ ability to dip into workers’ tips or pile on all kinds of fees to reduce paychecks.
Many of these protections do not extend to independent contractors. That is why the fight over misclassification is so important.
It is not just delivery and gig workers whose rights are at stake. Home care and IT workers are increasingly challenging independent contractor classifications. Anyone who has been misclassified as an independent contractor has the right to take legal action.
Am I Misclassified as a Contractor?
The U.S. Labor Department and many states use different tests to determine if a worker should be classified as an employee or an independent contractor.
The standard has been in flux at the federal level, but some of the most important factors include:
- Who controls the work
- The permanency of the relationship
- The worker’s opportunity for profit or loss
- The amount of initiative, judgment, or foresight required by the worker for success
California takes a different approach, which is commonly referred to as the “ABC” test. It is generally more difficult for companies to classify workers as contractors in the Golden State. A worker is presumed to be an employee unless a business can prove all three elements of the test:
- The worker is free from the hiring entity’s control,
- The work is outside the usual course of the business and
- The worker is independently established in a trade.
Washington state uses its own standard, which is similar to both the federal and California approaches. The bottom line is that anyone who believes that they have been misclassified should seek the advice of an experienced wage and hour attorney.
Our California Wage and Hour Attorneys Can Help
If you believe that your employer is violating your rights on the job, whether it is by misclassifying you or shortchanging you on regular pay or overtime, you do not need to go it alone. The California wage and hour attorneys at Justice Law Corporation can help you evaluate your claim and understand your rights and options.
Our offices are conveniently located in Pasadena and Seattle, and we serve clients across the region. Contact us at (818) 230-7502 to schedule a free consultation.
